The global electronics industry is expected to experience strong growth in the second half of the year due to the recovery of the global electronics cycle and continued positive foreign direct investment (FDI), as reported by HSBC. Vietnam, in particular, is on a path of recovery driven by its attractiveness as an investment destination and its leading position in the electronics industry within ASEAN.
Vietnam has become a top choice for supply chains due to its competitive labor costs, access to markets through numerous free trade agreements, and proximity to China. This has led to an increase in FDI projects and capital in the past 5 months, making it a favored destination for foreign investors. Additionally, Vietnam’s stock market has been performing well, with low stock valuations compared to demand and steadily recovering corporate profits.
However, inflation remains a concern in Vietnam, approaching the State Bank’s ceiling of 4.5%. Despite this positive outlook, factors such as inflation and currency volatility due to the USD strengthening in the short term may warrant caution from the State Bank in its interest rate policy.
HSBC has raised its GDP growth forecast for the last two quarters of the year to 6.2% each quarter, and expects Vietnam’s economy to expand by 6% for the whole of 2024. With continued positive FDI and expanding production, particularly in consumer electronics which have led export growth significantly, Vietnam is expected to experience strong growth in the second half of the year.
